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Document Preview Anthracite Capital, Inc. Reports First Quarter Net Income; Dividend Yield Is 11.5% |
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Title: |
Anthracite Capital, Inc. Reports First Quarter Net Income; Dividend Yield Is 11.5% |
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2003 |
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$35 |
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#333308 |
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FOR IMMEDIATE RELEASE
Contact: Richard Shea or Robert Friedberg
COO and CFO Vice-President & Controller
Anthracite Capital, Inc. Anthracite Capital, Inc.
Tel: (212) 754-5579 Tel: (212) 409-3333
ANTHRACITE CAPITAL, INC. REPORTS FIRST QUARTER
NET INCOME; DIVIDEND YIELD IS 11.5%
New York, NY - May 9, 2003, - Anthracite Capital, Inc. (the "Company") (NYSE:
AHR) today reported GAAP income for the first quarter of $0.18 per share
versus $0.11 per share for the fourth quarter of 2002 and $0.58 per share for
the year earlier quarter. The first quarter of 2002 included an adjustment to
goodwill of $0.14 per share as required by SFAS 142. Income from the operating
portfolio ("Operating Earnings") for the quarter was $0.40 per share versus
$0.41 per share for the fourth quarter of 2002 and $0.43 for the year earlier
quarter. (All numbers are thousands, except per share amounts)
Operating Earnings is net interest income after operating expenses and
preferred dividends but before realized gains and losses. The Company believes
Operating Earnings better reflects the quality of long-term earnings and
dividend stability provided asset values remain stable. Based on the $0.35 per
share dividend declared on March 6, 2003, and the May 8, 2003 closing price of
$12.20, Anthracite's annualized dividend yield is 11.5%.
Included in GAAP income for the first quarter are realized losses of $8,672
($0.18 per share), which are largely attributable to hedging the Company's
sensitivity to long-term interest rates. The Company's longstanding policy has
been to maintain limits on the exposure of the Company's equity to changes in
long-term rates as well as the exposure of earnings to changes in short-term
funding rates. The sale of five-year futures on U.S. Treasury notes to reduce
the Company's exposure to intermediate rates resulted in realized losses since
market value changes in those hedging investments must be marked-to-market
though the income statement. The value of these investments was negatively
affected as the five-year US Treasury went up in price (therefore reducing the
value of the hedged position) during the quarter as weak economic conditions
and hostilities in Iraq caused investors to seek investment safety in short to
intermediate U.S. Treasury securities.
Hugh Frater, President and CEO of the Company stated, "The Company continues
to make progress in adding commercial real estate assets and reducing exposure
to volatility in the residential mortgage backed securities ("RMBS") markets.
Our consistent position on hedging the Company's exposure to interest rates
has not been rewarded in the last several quarters but we continue to believe
that prudent asset liability management demands such a policy. Despite the
weak economy and low interest rate environment, the Company's return on equity
remains at a level which should sustain dividends at or near current levels
barring a significant deterioration in investment credit below our current
expectations. The net interest margin from our CMBS and commercial loan
portfolios has remained strong and we will continue to focus on diversifying
these credit exposures in an effort to further increase the stability of
earnings and dividends."
The Company's first quarter Operating Earnings represent an annualized return
on the quarter's average common stock equity (Annualized ROE) of 20.5% and net
interest margin of 3.6%. Annualized ROE for the year earlier period was 21.9%
and the net interest margin was 5.01%. The components of realized loss include
losses on futures that were hedging the RMBS portfolio and $262 of hedge
ineffectiveness reclassified from interest expense to other gain (losses); the
hedge ineffectiveness resulted in a decrease in first quarter total earnings
per share of $0.01.
Over the quarter, aggregate leverage increased from 5.32:1 to 5.41:1.
Short-term borrowing on credit sensitive positions was 0.35:1. After changes
to RMBS hedging were fully implemented early in the third quarter of 2002, the
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